Question 1

The curve that shows the quantity of goods and services that firms produce and sell

Accepted Answer

A)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve. 
B)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve. 
C)  as it relates to the overall price level is called the aggregate-demand curve. 
D)  as it relates to the overall price level is called the aggregate-supply curve. 
A)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-demand curve. 
B)  as it relates to the quantity of goods and services that buyers want to buy is called the aggregate-supply curve. 
C)  as it relates to the overall price level is called the aggregate-demand curve. 
D)  as it relates to the overall price level is called the aggregate-supply curve.

Question 2

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

Accepted Answer

A) True 
 B)False

Question 3

The aggregate quantity of goods and services demanded changes as the price level rises because

Accepted Answer

A)  real wealth falls,interest rates rise,and the dollar appreciates. 
B)  real wealth falls,interest rates rise,and the dollar depreciates. 
C)  real wealth rises,interest rates fall,and the dollar appreciates. 
D)  real wealth rises,interest rates fall,and the dollar depreciates. 
A)  real wealth falls,interest rates rise,and the dollar appreciates. 
B)  real wealth falls,interest rates rise,and the dollar depreciates. 
C)  real wealth rises,interest rates fall,and the dollar appreciates. 
D)  real wealth rises,interest rates fall,and the dollar depreciates.

Question 4

Which of the following statements is correct?

Accepted Answer

A)  Most economists use the model of aggregate demand and aggregate supply to analyze short-run economic fluctuations. 
B)  Economic fluctuations are essentially unrelated to changes in business conditions. 
C)  Economic fluctuations follow a regular,predictable pattern. 
D)  All of the above are correct. 
A)  Most economists use the model of aggregate demand and aggregate supply to analyze short-run economic fluctuations. 
B)  Economic fluctuations are essentially unrelated to changes in business conditions. 
C)  Economic fluctuations follow a regular,predictable pattern. 
D)  All of the above are correct.

Question 5

Because economists understand what things change GDP,they can predict recessions with a fair amount of accuracy.

Accepted Answer

A) True 
 B)False

Question 6

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what they produce had

Accepted Answer

A)  increased,so they would increase production. 
B)  increased,so they would decrease production. 
C)  decreased,so they would increase production. 
D)  decreased,so they would decrease production. 
A)  increased,so they would increase production. 
B)  increased,so they would decrease production. 
C)  decreased,so they would increase production. 
D)  decreased,so they would decrease production.

Question 7

The initial impact of an increase in an investment tax credit is to shift

Accepted Answer

A)  aggregate demand right. 
B)  aggregate demand left. 
C)  aggregate supply right. 
D)  aggregate supply left. 
A)  aggregate demand right. 
B)  aggregate demand left. 
C)  aggregate supply right. 
D)  aggregate supply left.

Question 8

Figure 33-2.  
-Refer to Stock Market Boom 2014.How is the new long-run equilibrium different from the original one?

Accepted Answer

A)  the price level and real GDP are higher 
B)  the price level and real GDP are lower. 
C)  the price level is higher and real GDP is the same. 
D)  the price level is the same and real GDP is higher. 
A)  the price level and real GDP are higher 
B)  the price level and real GDP are lower. 
C)  the price level is higher and real GDP is the same. 
D)  the price level is the same and real GDP is higher.

Question 9

The wealth effect,interest-rate effect,and exchange-rate effect are all explanations for

Accepted Answer

A)  the slope of short-run aggregate supply. 
B)  the slope of long-run aggregate supply. 
C)  the slope of the aggregate-demand curve. 
D)  everything that makes the aggregate-demand curve shift. 
A)  the slope of short-run aggregate supply. 
B)  the slope of long-run aggregate supply. 
C)  the slope of the aggregate-demand curve. 
D)  everything that makes the aggregate-demand curve shift.

Question 10

Other things the same,a decrease in the price level causes the interest rate to

Accepted Answer

A)  increase,the dollar to appreciate,and net exports to increase. 
B)  increase,the dollar to depreciate,and net exports to decrease. 
C)  decrease,the dollar to depreciate,and net exports to increase. 
D)  decrease,the dollar to appreciate,and net exports to decrease. 
A)  increase,the dollar to appreciate,and net exports to increase. 
B)  increase,the dollar to depreciate,and net exports to decrease. 
C)  decrease,the dollar to depreciate,and net exports to increase. 
D)  decrease,the dollar to appreciate,and net exports to decrease.

Question 11

Figure 33-2.  
-Refer to Stock Market Boom 2014.Which curve shifts and in which direction?

Accepted Answer

A)  aggregate demand shifts right 
B)  aggregate demand shifts left 
C)  aggregate supply shifts right 
D)  aggregate supply shifts left. 
A)  aggregate demand shifts right 
B)  aggregate demand shifts left 
C)  aggregate supply shifts right 
D)  aggregate supply shifts left.

Question 12

People will spend more if the price level

Accepted Answer

A)  rises because rising prices increase the real value of a dollar. 
B)  rises because rising prices decrease the real value of a dollar. 
C)  falls because falling prices increase the real value of a dollar. 
D)  falls because falling prices decrease the real value of a dollar. 
A)  rises because rising prices increase the real value of a dollar. 
B)  rises because rising prices decrease the real value of a dollar. 
C)  falls because falling prices increase the real value of a dollar. 
D)  falls because falling prices decrease the real value of a dollar.

Question 13

Other things the same,as the price level falls,which of the following increases?

Accepted Answer

A)  lending and investment spending 
B)  lending,but not investment spending 
C)  investment spending,but not lending 
D)  neither investment spending nor lending 
A)  lending and investment spending 
B)  lending,but not investment spending 
C)  investment spending,but not lending 
D)  neither investment spending nor lending

Question 14

Aggregate demand shifts right if

Accepted Answer

A)  taxes rise and shifts left if stock prices rise. 
B)  taxes rise and shifts left if stock prices fall. 
C)  taxes fall and shifts left if stock prices rise. 
D)  taxes fall and shifts left is stock prices fall. 
A)  taxes rise and shifts left if stock prices rise. 
B)  taxes rise and shifts left if stock prices fall. 
C)  taxes fall and shifts left if stock prices rise. 
D)  taxes fall and shifts left is stock prices fall.

Question 15

If aggregate demand shifts right,then eventually price level expectations rise.The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

Accepted Answer

A) True 
 B)False

Question 16

When production costs rise,

Accepted Answer

A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left. 
A)  the short-run aggregate supply curve shifts to the right. 
B)  the short-run aggregate supply curve shifts to the left. 
C)  the aggregate demand curve shifts to the right. 
D)  the aggregate demand curve shifts to the left.

Question 17

The short-run effects of an increase in the expected price level include

Accepted Answer

A)  a lower level of output and a lower price level. 
B)  a lower level of output and a higher price level. 
C)  a higher level of output and a lower price level. 
D)  a higher level of output and a higher price level. 
A)  a lower level of output and a lower price level. 
B)  a lower level of output and a higher price level. 
C)  a higher level of output and a lower price level. 
D)  a higher level of output and a higher price level.

Question 18

The initial impact of the repeal of an investment tax credit is to shift

Accepted Answer

A)  aggregate demand right. 
B)  aggregate demand left. 
C)  aggregate supply right. 
D)  aggregate supply left. 
A)  aggregate demand right. 
B)  aggregate demand left. 
C)  aggregate supply right. 
D)  aggregate supply left.

Question 19

Other things the same,if the price level rises by 2% and people were expecting it to rise by 5%,then some firms have

Accepted Answer

A)  higher than desired prices which increases their sales. 
B)  higher than desired prices which depresses their sales. 
C)  lower than desired prices which increases their sales. 
D)  lower than desired prices which depresses their sales. 
A)  higher than desired prices which increases their sales. 
B)  higher than desired prices which depresses their sales. 
C)  lower than desired prices which increases their sales. 
D)  lower than desired prices which depresses their sales.

Question 20

According to classical macroeconomic theory,changes in the money supply affect

Accepted Answer

A)  real GDP and the price level. 
B)  real GDP but not the price level. 
C)  the price level,but not real GDP. 
D)  neither the price level nor real GDP. 
A)  real GDP and the price level. 
B)  real GDP but not the price level. 
C)  the price level,but not real GDP. 
D)  neither the price level nor real GDP.

Exam 33: Aggregate Demand and Aggregate Supply

The curve that shows the quantity of goods and services that firms produce and sell

Fluctuations in real GDP are caused only by changes in aggregate demand and not by changes in aggregate supply.

The aggregate quantity of goods and services demanded changes as the price level rises because

Which of the following statements is correct?

Because economists understand what things change GDP,they can predict recessions with a fair amount of accuracy.

According to the misperceptions theory of aggregate supply,if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent,then the firm would believe that the relative price of what they produce had

The initial impact of an increase in an investment tax credit is to shift

Figure 33-2. -Refer to Stock Market Boom 2014.How is the new long-run equilibrium different from the original one?

The wealth effect,interest-rate effect,and exchange-rate effect are all explanations for

Other things the same,a decrease in the price level causes the interest rate to

Figure 33-2. -Refer to Stock Market Boom 2014.Which curve shifts and in which direction?

People will spend more if the price level

Other things the same,as the price level falls,which of the following increases?

Aggregate demand shifts right if

If aggregate demand shifts right,then eventually price level expectations rise.The increase in price level expectations causes the short-run aggregate-supply curve to shift to the left.

When production costs rise,

The short-run effects of an increase in the expected price level include

The initial impact of the repeal of an investment tax credit is to shift

Other things the same,if the price level rises by 2% and people were expecting it to rise by 5%,then some firms have

According to classical macroeconomic theory,changes in the money supply affect

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring a Nations Income

Measuring the Cost of Living

Production and Growth

Saving, investment, and the Financial System

The Basic Tools of Finance

Unemployment

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters